Understanding How Uber Fares and Surge Pricing Work

Uber is one of the fastest growing transportation apps in the world. In fact, it is slowly taking over taxis as the number one choice of public transport in most of the major cities in the world. Uber cars are beneficial to both drivers and riders. For drivers, you can drive using your own private vehicle (as long as it is registered to Uber) or rent a car to be able to generate extra income. For riders, you can enjoy the convenience of having your own private vehicle to get to your desired destination. You can even take advantage of the Uber rideshare concept to save money on your trip.

While there are several things to love about the Uber market, some would say that the ability to calculate the cost of your fare prior to booking a ride is one of its biggest advantages. Despite of that, there are also several issues surrounding the surge pricing concept. If you want to save money with Uber, or make extra income driving Uber cars, it is important to brush up on the fare calculation and surge pricing to exploit earnings or savings.

Estimating Your Uber Fare

As mentioned above, one of the advantages of hiring Uber cars is that you will be able to know your fare before actually requesting for a ride. But how does Uber calculate the fare? You can get a fare estimate on the app by putting in your destination and the app will calculate the cost of the fare depending on where you are traveling from.

There are four criteria used for estimating your Uber fare: 1) base fare, 2) cost per minute, 3) cost per mile, and 4) booking fee. The base fee is a flat fee that you get charged with for merely booking a ride. The cost per minute and cost per mile are calculated based on each minute you spend during the ride and the total number of miles traveled to reach your destination. Meanwhile, a booking fee is designed to cover the operational costs for hiring an Uber driver.

What is Surge Pricing?

Surge pricing is one of the most controversial features of Uber. There are some people who think it’s fair while others think it is a way to exploit the demand for the service. Whichever way you look at it, it can be beneficial for drivers who provide their service through Uber so they can earn extra income.

Surge pricing for Uber basically means prices go up for each ride based on demand, time of day and the city. There are certain times in a day wherein most people are requesting rides on Uber, which often takes place during rush hour. During this time period, prices on Uber fares can go up a little. The surge pricing will become visible on the app by the time the riders try to request a ride. Hence, they have an option to book a ride now or wait a little later when the rates go back to normal range. It is hinged on the concept of economies on scale wherein drivers are incentivized for providing service during a time wherein they are needed most by riders. This is also Uber’s way of encourage more partners to provide services during rush hour, weekends or other times wherein surge pricing could happen.